Source: U.S. Energy Information Administration, based on Turner, Mason & Company

In response to multiple requests over the past years, EIA is developing a series of analyses that address the implications of current limitations on crude oil exports for prices, including both world and domestic crude oil and petroleum product prices, and for the level of domestic crude oil production and refining activity.

The most recent report—Implications of Increasing Light Tight Oil Production for U.S. Refining—considers how refining activity in the United States might respond to low and high scenarios of increasing U.S. light tight oil production. EIA retained Turner, Mason & Company (TM) to conduct this analysis using their refinery expertise and modeling capabilities that represent the U.S. refining system in much greater detail than is possible using the modeling framework that EIA uses to develop its Annual Energy Outlook.

The TM analysis considers operational changes and investments in capacity expansion that domestic refiners would likely make to process increasing volumes of light oil. The analysis considers two domestic production scenarios provided to TM by EIA, and two crude oil export policies (one reflecting current restrictions on crude oil exports, the other allowing unrestricted crude oil exports). The analysis covers the period from 2014 to 2025, using 2013 as the base year.

One pairing, combining low crude oil production and unrestricted crude oil exports, was considered but ultimately not included in the analysis, as the results were not materially different from those obtained for low crude oil production under current crude oil export restrictions.

In all cases considered, higher domestic crude oil production leads to a decline in crude oil imports, an increase in refinery runs, new investments to expand processing capacity, and higher crude oil and petroleum product exports. However, the magnitude of the changes and the complexity of the new processing units added vary across the scenarios.

While most of the ultimate uses of increased production are similar in the two cases developed using the higher domestic crude oil production path, there is one key difference. Under current policy, where U.S. crude oil exports are restricted, a significant amount of new refining capacity is built. However, if export policy restrictions were relaxed, almost 2.3 million barrels of crude oil could be exported by 2025.